Covered Short Strangle Calculator

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What is a covered short strangle?

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A risky income strategy which increases the yield of a covered call by selling an out of the money put for additional income. It is similar to a covered straddle but doesn't introduce as much risk.

If the stock falls below strike A, the put will be exercised and you must buy 100 shares of the underlying at strike A. If it rises above strike B, the call will be exercised and the underlying position will be sold. Time is helpful to this strategy as the value of the options will decay.

ABProfitLossStock Price (at expiration)
  • Own the underlying
  • Sell a put at strike A
  • Sell a call at strike B